If a lease does not meet at least one of four conditions described in U.S.GAAP,then it is classified as which of the following?
A)capital lease.
B)operating lease.
C)direct financing lease.
D)sales-type lease.

Question

Quizplus · Accepted Answer

If a lease does not meet at least one of the four conditions described in U.S. GAAP, then it is classified as an operating lease. The four conditions are: 1) a transfer of ownership at the end of the lease term, 2) a purchase option at a bargain price, 3) a lease term that is equal to or greater than 75% of the asset's useful life, and 4) the present value of lease payments is equal to or greater than 90% of the asset's fair value.

If a Lease Does Not Meet at Least One of Four